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Davis Won't Delay Insurance Plan

Health: Governor says up to 300,000 could be covered if the Legislature finds $200 million.


In a reversal, Gov. Gray Davis late Friday said he would support expansion this year of a popular health insurance program for low-income families despite the financial pain it would cause.

Davis pledged that he would not delay coverage of up to 300,000 low-income parents provided the state Legislature comes up with about $200 million to pay for it. As recently as Friday afternoon, Davis' aides had said an 18-month delay was needed to save money.

His announcement came near the conclusion of an appearance with U.S. Secretary of Health and Human Services Tommy G. Thompson at an East Los Angeles health clinic. Thompson approved a federal government waiver allowing California to enroll parents and guardians in a state program that already provides health insurance to children of working-poor families.

"California, here is your waiver," said Thompson, signing the document and handing it to Davis.

With the piece of paper came a political quandary, and the governor struggled Friday to resolve it.

Extending health coverage to parents is politically popular, particularly among the liberals and moderates Davis needs to win reelection in November. But with the state facing a budget deficit of $12.4 billion, any new spending on health insurance would have to be offset by costly borrowing or cuts to other politically popular programs.

In his comments Friday, Davis split the difference. He expressed his administration's "genuine desire" and "readiness" to implement the program by summer--while shifting the onus for funding the launch to the Legislature.

Under the plan, California would put up more than $200 million over two years to extend coverage to working parents of children who receive insurance through the state's Medi-Cal and Healthy Families programs.

Under those programs, California provides medical coverage to about 1 million children whose families earn less than 250% of the federal poverty level. That is $44,125 per year for a family of four.

The California plan would expand coverage to working parents, though under a slightly more stringent formula. To be eligible, they could earn up to 200% of the federal poverty level, or $35,300 for a family of four.

The federal government, under a 2-to-1 match per dollar spent, would provide more than $400 million over two years.

"We'll begin enrolling parents as soon as we can ... if not by July 1, then soon after," Davis said in a brief interview. "There's a genuine desire to move this forward. The question is if the Legislature can find the money."

Asked if he had ideas for cuts or borrowing to offset the new costs, Davis replied: "I don't even want to start." Some legislators reacted with frustration to his actions, but said they would do what they could to launch the program--perhaps in phases.

"As soon as we heard about the deal, we started looking for the money," said state Senate President Pro Tem John Burton (D-San Francisco). Maybe, he added, the money could be taken from some "silly award things for education," a reference to one of Davis' pet programs.

The governor's predicament represented a political version of an old lesson: Be careful what you wish for.

The governor had first proposed the waiver--and the expansion of coverage to adults--in December 2000, when the state was flush with cash.

But the federal government did not agree to the plan until this week. With the state budget deficit rising, finding the money for the state's share looked difficult.

Since late last year, Davis and other state officials have insisted that enrollment be delayed until July 2003, when more money would be available for the state's share.

But after word of the federal waiver came down this week, that proposal drew criticism from the leading Republican candidate for governor, former Los Angeles Mayor Richard Riordan, health-care activists and even some of Davis' fellow Democrats.

They noted that under federal funding formulas, California would lose hundreds of millions in matching funds during the delay.

Thompson's decision to grant the waiver put Davis on the spot, and talk in political circles Friday centered on whether the Bush administration was trying to make life difficult for a Democratic governor up for reelection.

"I wonder if Bush didn't do this to stick it up you-know-who's you-know-what," Burton said.

Thompson denied any political intent, saying California had only recently adjusted its application for a waiver to reflect new federal guidelines.

The secretary also pointed out that the Bush administration intends to make $3.2 billion in unspent funds for insuring children available to the states in fiscal year 2003, rather than returning it to the federal treasury.

Thompson, a former governor of Wisconsin, called Davis a friend and joked that "I didn't know he was a Democrat."

Asked about the politics of the decision, Davis demurred. "We'd rather have the waiver than not have."

That statement matched the views of parents who stand to gain from the program.

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